The cryptocurrency market is undergoing a significant correction with Bitcoin leading the downturn. The total market cap of all digital assets retreated by over 3%, slipping to approximately $2.59 trillion. Bitcoin, the largest cryptocurrency by market cap, was not spared from the sell-off, dipping below the $68,000 mark to trade in the region of $67,600.
This recent dip comes on the back of an extensive liquidation event in the crypto derivatives market, where more than $160 million was wiped out in the past day alone. Most of the losses originated from long position traders who were caught on the wrong side of the market’s swift turn.
Additionally, Tether’s USDT has seen a spike in trading volume, overshadowing both Bitcoin and Ethereum, with its daily average volume reaching around $47 billion. This suggests a move towards stability and a preference for liquidity in the face of market uncertainty.
Macro factors are also in play. Investors are watching closely as the United States Bureau of Labor Statistics is set to release new Consumer Price Independent data, while expectations are hung on the Federal Reserve’s forthcoming FOMC statement and benchmark interest rates decision. Contrasting signals from different central banks have contributed to market volatility, with the European Central Bank and the Bank of Canada slashing rates recently, whereas the US is poised to maintain its interest rates.
Bitcoin’s price action also indicates a troubling structure, a potential head and shoulders pattern, notorious amongst traders for its bearish implications. The $72,000 price level has proven to be a strong resistance, and a bearish divergence on the Relative Strength Index (RSI) offers additional evidence of potential downside.
On the institutional front, the United States-based spot Bitcoin exchange-traded funds (ETFs) experienced net outflows after weeks of cash pouring into the sector. It’s worth noting, however, that investment management corporation BlackRock has seen modest inflows amidst the wider downturn.
Ethereum, the second-largest cryptocurrency, has similarly struggled to maintain its footing above the $4,000 threshold, with its inability to surpass it indicating the possibility of extending its bearish trend.
In parallel, significant on-chain activity was observed as an unnamed crypto whale deposited a substantial amount of PENDLE tokens into Binance, equating to $3.83 million, leading to speculation of imminent sell pressure for the token.
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Investors and traders are now bracing for a rocky period in the cryptocurrency markets, as technical signals and macroeconomic conditions converge to create an unpredictable landscape. With eyes on regulatory announcements and rate decisions, it’s expected that the markets may face further movements in the near term.
